Just some weeks ago, prospects for Egypt's long-desired FTA with the US were looking brighter than ever. Years of steady lobbying finally started to pay off, and the US had begun signaling its willingness to move on the Egyptian FTA. US President George W. Bush had mapped out his vision of a region-wide US-Middle Eastern FTA. Zoellick had hailed Egypt as the natural heart of this proposed regional entity and predicted formal negotiations for a bilateral FTA would begin in early 2004.
The exact reasons for the US about-face are a matter of ongoing speculation. But many attribute it to simple retaliation for Egypt's own reversal on an issue close to the US administration's heart: genetically modified foods. In May, the Egyptian Government announced that it was withdrawing its support for a US-backed complaint before the World Trade Organization over the European Union's ban on importing genetically modified foods. Egypt's attitude to the WTO complaint was symbolic but crucial. The other three supporting countries - the US, Canada and Argentina - account for around 95% of the world's transgenic crops, and therefore hold a strong financial stake in knocking down export barriers.
The US is home to more than 60% of the world's genetically modified crops and giant US agricultural companies dominate the market on transgenic seed development. The EU's resistance to genetically modified imports is a strong financial obstacle to US plans to export those seeds, as African nations (which export largely to the EU) are reluctant to start growing genetically modified crops as long as they're banned in Europe.
Egypt has no intention to export genetically modified crops. There is ongoing Egyptian research into pest-resistant genetically modified crops, but these are intended for domestic consumption. As an impartial party and the only African nation to support the complaint, Egypt brought significant moral legitimacy to the motion.
Zoellick and other US administration officials were reportedly infuriated by the Egyptian reversal. His frustration with the broken pledge seemed to bleed into some of the other statements he made in Amman. "When I'm working with a colleague, I need to know their word is good."
Now Egypt finds itself in a lose-lose situation: caught between two giants (the US and the EU) in a dispute in which it has no real stake apart from the desire to keep both giants happy. The EU is a major market for Egyptian agricultural exports, and fear of retaliation by Europe is thought to be the main reason for Egypt's withdrawal from the WTO complaint.
In addition, there is widespread speculation that Egypt's confusing stance on this issue is due to an ongoing inter-ministerial dispute over exactly which of the global giants to appease. According to local press reports, the Ministry of Economy and Foreign Trade favors tighter relations with the US, while the Foreign Ministry advocates making Europe the priority.
There are also rumors that Minister of Economy Youssef Boutros-Ghali overstepped his authority by committing Egypt to the US complaint without first checking with the rest of the Government. Boutros-Ghali himself continues to muddy the waters. Recently, he said that Egypt, despite its withdrawal from the WTO complaint, still supports the US initiative to open EU markets to genetically modified crops. "There is no difference between the two positions [of the United States and Egypt]. There may be a difference in approach, but there is no difference in our positions," he said.
